As an Indiana estate planning attorney who was born and raised in Minnesota, I have watched the administration of Prince Rogers Nelson’s estate from a distance with great interest. Prince, of course, is a music icon who passed away in April 2016 without an estate plan, and from all accounts in the news media the administration of his estate has been extremely complex.
At the outset the estate’s administrator dealt with claims by multiple individuals that Prince was their father. In addition, the administrator had to handle complex assets, such as Prince’s Paisley Park home (which now offers public tours) and the rights to his music. Concerning Prince’s unreleased recordings, it has been reported that in February 2018 the administrator entered into an estimated $31 million contract to sell rights to those assets to Universal Music Group and that the estate received payment in full as a distribution advance. Unfortunately for the administrator and estate beneficiaries a contract dispute later arose between Warner Bros. and Universal regarding the rights that were sold. Subsequently, the $31 million contract was rescinded by the local Judge, and the estate will have to refund the money to Universal. The Judge did not address the merits of the contract dispute but instead rescinded the contract so as to avoid further litigation and the Judge directed the estate to proceed cautiously to preserve the assets.
This saga, and the Judge’s comments, should cause Indiana estate planning attorneys to revisit this most basic duty of the personal representative – the duty to preserve the estate’s assets. In many instances this duty boils down to simply proceeding with due caution and acting as a “prudent person” would act under similar circumstances to preserve the existing value of the estate. Typically, beneficiaries of an estate are not going to complain about any potential unrealized increases in value, but they certainly are inclined to complain if the estate’s assets lose value and the personal representative could have taken action to protect the estate.
In this vein, personal representatives should often take the following simple steps (among other potential steps) at the outset of an estate to preserve the assets:
- identify all of the estate’s assets and their values, and create an inventory of them;
- take possession or control of all estate accounts and other estate assets;
- ensure that assets have proper insurance coverage, as applicable;
- identify all reasonably ascertainable creditors and provide them with timely notice of the estate administration; and
- ensure that estate transactions and assets are handled and invested as a prudent investor would, and that reasonable care, skill, and caution are exercised at all times (i.e., risky transactions and holding should be avoided unless the decedent’s estate plan give clear direction to the contrary).
Whether dealing with a multi-million dollar estate of a rock icon or handling an estate of a few hundred thousand dollars, these few steps and the general rule to proceed with caution are good guideposts for the personal representative of any estate to follow.
For additional information regarding estate planning, please contact Steven Latterell or another member of Ice Miller’s Trusts and Estates Group.